SEC Releases Annual Staff Report on Form PF Data Collection Uses (with Lofchie Comment)

The SEC has released its annual staff report relating to the use of data collected from Form PF. Form PF was implemented in 2011 as a provision of Section 404 ("Collection of Systemic Risk Data; Reports; Examinations; Disclosures") of Dodd-Frank, requiring certain registered investment advisers that advise private funds to report information to the Commission, primarily for the FSOC to assess systemic risk. At this point, the SEC has only recently received a complete set of initial filings and therefore has only started assessing the quality of the data collected. The report notes the Commission's staff will continue to assess data quality, and will further develop data analytics incorporating Form PF data.

Lofchie Comment: The information in this report is very "high-level" (e.g., number of funds that reported by type). There is not much actual analysis of the data. Important questions on the Form are so poorly written that the data is not that useful. (For a discussion of this issue, and Form PF generally, see the Reporting Chapter of the Hedge Fund Guide.) In this regard, the Report says, "Of critical importance to expanding the utility of the data is confidence in the information provided by filers. Commission staff also is proactively trying to improve data quality by, for example, issuing FAQs on interpretive issues that commonly arise from filers." It is comforting that regulators are now working to improve the form. It is too bad that tens of millions of dollars are likely being wasted on providing essentially useless information to regulators because the Form was implemented without being properly vetted.

See: SEC Annual Staff Report. See also: SEC FAQs: Form PF (with Lofchie Comment) (March 11, 2013); Reporting by Investment Advisers to Private Funds and Certain Commodity Pool Operators and Commodity Trading Advisors on Form PF (Final Rule) (November 16, 2011).

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